I use this blog to gather information and thoughts about invention and innovation, the subjects I've been teaching at Stanford University Continuing Studies Program since 2005.
The current course is Principles of Invention and Innovation (Summer '17).
Our book "Scalable Innovation" is now available on Amazon http://www.amazon.com/Scalable-Innovation-Inventors-Entrepreneurs-Professionals/dp/1466590971/

Sunday, February 05, 2012

Facebook's key vulnerabilities.

- [if] we are unable to successfully balance our efforts to provide a compelling user experience with the decisions we make with respect to the frequency, prominence, and size of ads and other commercial content that we display;

- [if] we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance.

Both of them are based on trade-offs. The first one is a trade-off between the ads and content. That is, on one hand, the more ads Facebook places, the more revenue it gets, but on the other hand, the more ads it places, the more it annoys its users. 10 years ago Yahoo failed to solve this trade-off and entered a long period of decline.

The second trade-off is between the need to be active in the mobile market, and the lack of a successful ad placement strategy there. That is, the more users access Facebook on mobile, the less revenue the company gets.

We do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven. Accordingly, if users continue to increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, our revenue and financial results may be negatively affected.